Also driving the stock: speculation that the consolidation sweeping the telecommunication equipment companies will spread to ADC Telecom, which makes transmission products that send electronic signals over public networks. Two such equipment mergers have already been announced this month: Northern Telecom's (NT)
nt
acquisition of Bay Networks (BAY)
BAY, -7.14%
and Tellabs' (TLAB)
tlab
combination with Ciena (CIEN)
CIEN, +0.52%
.

"We aren't in active discussions (with rivals) right now, but I understand there is a lot of speculation of who might be interested in us," Switz said. On Thursday, news reports speculated that Ericcson (ERICY)
ericy
of Sweden might bid for 3Com (COMS)
coms
. Shares of 3Com rose 10.7 percent Thursday.

'Married puts' on ADC

In addition to the heavy stock volume, which was five times above average, an extremely large number of July 30 puts (TLQ=SF)
tlq%3dsf
crossed the tape on Thursday.

Peter Eberle, former options trader turned managing director at the Mr. Stock discount brokerage in San Francisco, first noticed a strategy that investors call a "married put."

In this scheme, investors buy the stock at market price as well as the put, which gives them the right in this case to sell the stock at 30 any time over the next month, regardless of which way the stock heads.

"Basically, it's a conservative way to go long," said Eberle. "At the worst, an investor knows he can always sell at 30."

On Thursday, shares of ADC added 3 1/16 to 30 15/16.

Although the telecommunications equipment industry has been consolidating recently, SoundView Financial analyst Chandan Sarkar said he didn't expect ADC to be part of the trend.

"ADC is a heavily diversified company, they don't focus on any single area of the market," Sarkar said. Typically, companies buy other companies to get specialized products that are too costly to develop internally.

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